The Real Crisis in Leadership


Rasmus Hougaard
This is an updated version of the article originally published in
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Being trustworthy and selfless; truthful and compassionate – these are wonderful qualities. If leaders consistently displayed these traits, workplaces and employees would be doing much better. But not all leaders, including many of the most famous and successful, exhibit these qualities.

Together with my colleague Jacqueline Carter, and a global research team from Potential Project, we conducted a two-year study on 35,000 leaders, to unravel the state of leadership in organizations.

A 2016 Gallup poll found that only 18% of managers demonstrate a high level of talent for managing others – meaning a shocking 82% of managers aren’t very good at leading people. Gallup estimated that this lack of leadership capability costs U.S. corporations up to $550 billion annually. Considering how much time and effort is put into creating good leaders, how could this be?

A Faulty Promotion Process

One part of the problem is that the processes that help determine and shape leaders often produce people who behave differently from what most employees desire. Managers are mostly promoted into their roles based on tenure or previous manager roles – with little account for whether they possess the humanistic skills and qualities of good leadership.

And in many cases, the qualities that organizations actually select for and reward in most workplaces – ambition, perfectionism, competitiveness – are precisely the ones that are unlikely to produce leaders who are good for employees or for long-term organizational performance. People on the leadership fast track tend to earn promotions and bonuses by pushing their reports and defeating their inner-organizational competition (other managers).

Unfortunately, the above process often turns leaders into either tone-deaf bosses, at best, or abusive bullies, at worst. Consequently, significant data on workplace bullying report widespread verbal abuse, shouting, berating others, and the creation of a climate of intimidation.

According to Dacher Keltner – a professor of psychology at University of California, Berkeley and frequent contributor to Harvard Business Review – when many leaders start to feel powerful, their more benevolent qualities like empathy start to decline.

Other studies show that people in positions of corporate power are three times more likely than lower level employees to interrupt coworkers, multitask during meetings, raise their voices, and say insulting things.

An Inflated Sense of Self

The unfortunate paradox in all of this is that a strong sense of self-deception plagues many leaders. In a 2016 McKinsey & Company study of more than 52,000 managers and employees, leaders rated themselves as better and more engaging than their employees did. This included 86% of leaders who believed they model the improvements they want employees to make, while another 77% of leaders believed they “inspire action.”

Compare these self-perceptions to the previously cited Gallup poll which showed that 82% of managers and executives are seen as lacking in leadership skills by their employees. Termed “self-enhancement bias,” these numbers show that a surprising number of leaders suffer from inflated views of their abilities.

It’s Tough All Over

To be fair, things are little better for leaders themselves. Senior leaders face ever-tougher conditions, including decreasing tenures and rising rates of termination.

According to Stanford business professor Jeffrey Pfeffer, one critical time for leadership derailment occurs during that first period of career ascension – when people move from positions where they can succeed mostly on the basis of their individual performance to more interdependent roles where political skills become vital.

The next critical time, according to Pfeffer, comes around twenty years later, when, if successful, leaders have climbed to senior levels where everyone is ambitious and accomplished. At that point, the differentiating factor for success is the ability to navigate politically charged, hyper-competitive environments. This requires far different skills than those needed to make other people happy and fulfilled.

These grim workplace realities raise a very reasonable question: Shouldn’t this crisis be fixable through more education and increased training for leaders?

Well, yes. But—

Leadership Training Is Failing

To be blunt, there’s very little evidence that the majority of leadership training has had a positive impact on leadership effectiveness, office environments, or worker engagement. And this isn’t for a lack of trying.

Today, we have an ever-growing leadership industry consisting of an almost limitless number of books, blogs, articles, workshops, conferences, and speeches.

How big is it?

According to a recent report by Deloitte, organizations around the globe invest approximately $46 billion annually on leadership development programs.

Many of these leadership-development efforts, however, have failed to improve the state of leadership and have shown very few tangible results. In a scathing indictment of the leadership industry, Harvard lecturer and founder of the Center for Public Leadership Barbara Kellerman wrote that the leadership industry “has failed over its roughly forty-year history to in any major, meaningful, measurable way improve the human condition.”

A study by the Corporate Leadership Council supports Kellerman’s assertion, finding that the billions upon billions of dollars spent on leadership training has improved productivity by only 2%.

This dismal ROI can be traced to the fact that much of leadership training and development has become, to use professor Jeffrey Pfeffer’s words, “a form of lay preaching.” Anyone can call themselves a “leadership consultant,” hang out their shingle, and start peddling leadership theories.

If you look to the leadership training industry for answers, it seems, you’ll likely be disappointed. The sad truth is that even though budgets for leadership training are increasing by the year, little appears to be known about which leadership strategies yield results.

Toxic Workplaces – Ruined Lives

Not surprisingly, the result of all these factors is toxic workplaces in which both leaders and their reports feel despondent, underappreciated, and mistreated.

In fact, according to data, one in two employees at some point in their career leave their job to get away from their manager – solely in an effort to improve their overall lives. Think about this fact for a moment: 50% of employees leave their jobs at some point because their leaders are so bad that they’re literally ruining their lives.

Being Human

But there is a solution. If we as leaders want to actually improve engagement and increase productivity, we must look beyond superficial incentives like bonuses and free food. We must break free of regressive management and financial theories. Instead, we must understand what truly drives people – what makes them happy.

We should stop letting endless statistics and the latest leadership gimmick blind us to the most basic human motives such as respect, meaning, and fulfillment. People leaving the office with a sense of fulfillment every day will want to come back, focus on tough projects, and work hard: their intrinsic motivation will drive them to continue doing their best day after day, year after year.

As Javier Pladevall, an automotive executive put it, “Leadership today is about unlearning management and relearning being human.”

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